Beating Low Cost Competition : How Premium Brands can respond to Cut-Price Rivals

by Adrian Ryans (IMD)

• ISBN13: 9780470745229
• ISBN10: 0470745223
• Format: eBook
• Copyright: 2009-01-01
• Publisher: Wiley
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Summary

Low cost competitors, who offer "good enough" products and services at very attractive prices, are currently significantly impacting the businesses of many leading companies, and some are starting to "move up" to challenge the traditional companies in their core markets. It's only a matter of time before most companies will feel the pressure from these aggressive, cut-price competitors. Beating Low Cost Competition offers a step-by-step structured approach to help executives in traditional companies with premium brands think through the options for responding to their low cost rivals and select the most appropriate strategy to win in their chosen markets.By examining a wide-ranging group of companies from around the world, Adrian Ryans provides numerous examples of how different companies in different industries have responded to low cost competitors and analyses the effectiveness of their strategies. He also discusses the leadership and cultural challenges that many companies are facing as they take steps to respond to their low cost rivals.Ultimately, the insights gained from this book will lead to better and more profitable business decisions.Adrian Ryans is Professor of Marketing and Strategy at IMD, Lausanne, Switzerland. He has designed and taught on executive programs for organizations in North America, Europe, Australia and Asia, including GE, Bank of Montreal, Medtronic, Deloitte, Borealis, Saurer, Vestas, IBM, Boeing, National Semiconductor, BioWare, ASML, Holcim, Varian, Hoechst, Amgen, Fluke, LSI Logic, Hutchison Port Holdings and Qualcomm. He has also acted as a consultant for a number of leading global corporations.

Table of Contents

ContentsPrefaceAcknowledgments1 The Growing Challenge from Low Cost CompetitorsThe Challenge is Real and It is Here to StayRetailingAirlinesBankingFast-moving consumer goodsConsumer electronicsBusiness-to-business products and servicesIn Many Industries the Major Threat is Coming from AsiaMany Customers Prefer Good Enough Products and ServicesLow Cost Competition Is Not All Bad NewsUnderstanding and Responding to the Challenge of Low Cost Competition2 Why the Threat from Low Cost Competition is IntensifyingValue Propositions Have Three Core ElementsPerformance valuePrice valueRelational valueOne core value proposition is usually emphasizedThe relative size of the different value segments may evolve over timeProduct category life cycles are getting shorterThe Traditional Integrated Business Model is DisintegratingThree core processes underpin any businessGiving balanced attention to all three core processes can lead to conflictCompanies are leveraging the specialized playersCompanies with focused business models are playing a much bigger role in many industriesMany more companies are opening their business modelsBut there are significant risks in relying more on strategic partnersTotal solution coordinators are helping some companies leverage these networksGrowing Support for Low Cost CompetitorsLow cost entrants sometimes have powerful supportersCustomers are increasingly willing to buy from low cost playersChallenge Questions3 Understanding How Low Cost Competitors Play the GameRyanairPerformance has been outstandingValue proposition is crystal clearBusiness model is innovative and focusedExtreme focus on cost controlCreated a virtuous cycleSo far . . . so goodING DIRECT USABorrowed with prideAppealing value propositionEarly successCompetition finally responds and ING DIRECT raises the stakesLearning from Low Cost CompetitorsQuestion every element of the traditional business modelHave very simple and straightforward value propositionsAvoid complexity at any costBreak through the communication clutterBe a cost innovatorRemember that the customer is not always rightHave the courage to drop prices significantly below competitionTraditional Players Can Learn from Low Cost CompetitorsChallenge Questions4 Realistically Assessing the Threat#6